Forecast of Ukraine’s economic developments in 2001–2002 International Centre for Policy Studies


НазваForecast of Ukraine’s economic developments in 2001–2002 International Centre for Policy Studies
Дата конвертації28.04.2013
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ТипПрезентации


Forecast of Ukraine’s economic developments in 2001–2002

  • International Centre for Policy Studies

  • February 28, 2001


Presentation outline

  • Why macroeconomic forecast

  • Forecast of real sector variables

  • Forecast of financial variables

  • Issues and risks



Why macroeconomic forecast?

  • Business activities occur within a given macroeconomic environment

  • For each business, the macroeconomic environment is a source of benefits as well as risks

  • Macroeconomic forecast helps to evaluate these benefits and costs related to the risk



What does macroeconomic environment consist of?

  • Financial conditions

    • price levels
    • exchange rates
  • Demand

    • domestic consumption
    • expectations of households and enterprises
    • conditions in foreign markets
  • Supply

    • productivity of the economy
  • Government policies and regulations



What is happening in Ukraine’s economy?

  • Improvement in government policy lifted household and business expectations

  • Household consumption is recovering after long period of depression

  • Business investments is increasing at two-digit rates of growth



GDP growth

  • In 2000, Ukraine GDP grew by 6%

  • We forecast that in 2001 GDP growth will increase by 5%, in 2002 — 5.5%



Real GDP, 1995–2002 Index, Q1’1995=100, seasonally adjusted



Why is Ukraine’s economy growing?

  • Consistency of government policies are ensured due to new procedures of government decision-making

  • The most distorting taxes are cancelled

  • Improvements in budget policy benefit the poorest

  • Financial stability has been achieved

  • Effects from privatization are being realized both in industry and agriculture

  • World economy is on the crest of the cycle



How are households feeling?

  • In December, 2000 Consumer Confidence Index was 14.3 percentage points up

  • In 2000, real private consumption increased by 8.5%

  • Larger incomes transfer into fast consumption increase due to high propensity to consume

  • Private consumption will rise by 6.5% in 2001 and by 6% in 2002



Consumer confidence across income groups



How are businesses feeling?

  • In 2000, investment increased by 11%, mostly originated from profits

  • Investments will grow by 10% in 2001 and by 12% in 2002

  • Businesses are learning to withstand enhanced competition

  • Growing economy presses for the reform of natural monopolies



GDP and hours worked, % annual change



Financial indicators

  • Exchange rate will not fluctuate significantly in 2001–2002

  • Nominal hryvnia will slightly depreciate, while hryvnia in real terms will revalue

  • Rate of inflation will decrease to 17% in 2001 and 14% in 2002

  • International central bank reserves will increase by around $600 million annually



Exchange rate and inflation



Issues for investors

  • Is government capable to implement reforms?

  • Will the political consensus be preserved?

  • Is it plausible to decrease inflation below 10%?



Government capacity to implement reforms is weak

  • There is no such rule in the government that implementation plan is attached to every decision

  • Implementation is not being evaluated in terms of effectiveness and efficiency

  • Neglect of the implementation issues resulted in the uncertainty about future tax policy



Political debate can bring positive changes

  • Political instability creates risk to consensus on economic reforms and delays adoption of new legislation



Monetary policy debate

  • The goals of monetary policy are to increase international reserves and to decrease inflation

  • National Bank will give priority to rising international reserves

  • Foreign currency purchase by National Bank will keep two-digit rate of inflation in 2001–2002



About ICPS



The International Centre for Policy Studies is an independent non-profit research organisation, established in 1994 upon the initiative of the Open Society Institute

  • The International Centre for Policy Studies is an independent non-profit research organisation, established in 1994 upon the initiative of the Open Society Institute

  • Our mandate is to promote the introduction of public policy concepts and practices in Ukraine:

    • to increase awareness in the government and the general public of the need to analyse policy alternatives and to study the possible consequences of adopting any given policy before adopting strategic decisions


Economic policy

  • Economic policy

  • Public administration

  • Educational policy

  • European integration

  • Regional policy



Independent policy research

  • Independent policy research

    • Ongoing research/Publications
    • Commissioned research
  • Training for policymakers

    • Assisting governments
    • Assisting NGOs
  • A forum for public dialogue



Customers: business, government, and international organisations

  • Customers: business, government, and international organisations

  • Essence: we apply its economic and other expertise in order to develop strategic solutions for clients

  • Principles: (1) participation of all interested parties; (2) presentation and analysis of all points of view; and (3) independent conclusions and recommendations



Causes and effects of the illegal import and circulation of tobacco products in Ukraine (commissioned by the Coalition for Intellectual Property Rights)

  • Causes and effects of the illegal import and circulation of tobacco products in Ukraine (commissioned by the Coalition for Intellectual Property Rights)

    • Research report
    • Expert discussion + seminar
    • Publication and dissemination


Publications

  • Publications

    • Quarterly Predictions
    • Policy Studies
    • Consumer Confidence
    • Economic Statistics
    • ICPS Newsletter
  • Direct access to economists for advice

  • Seminars

    • Tailored to Partners’ needs
    • Other events


ICPS is a not-for-profit institution and it can receive only donations, not fees

  • ICPS is a not-for-profit institution and it can receive only donations, not fees

  • Donation for Partners in year 2001 —1,995 hryvnias ($345)



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